Excess service tax adjustment may be carried forward to a later month or quarter, not just the next period.

Rule 6(4A) of the Service Tax Rules, 1994 permits adjustment of excess service tax paid against liability for succeeding months or quarters, and the substitution by Notification No. 1/2007-ST was read as removing any restriction confining adjustment to only the immediately succeeding period. On that construction, the assessee's adjustment in a later month or quarter was held permissible, and the departmental objection was rejected as inconsistent with the statutory scheme.

---

---

Issues: Whether excess service tax paid by an assessee could be adjusted against service tax liability in any subsequent month or quarter, and whether such adjustment was confined only to the immediately succeeding period under Rule 6(4A) of the Service Tax Rules, 1994.

Analysis: Rule 6(4A) permits an assessee who has paid excess service tax to adjust the excess amount against service tax liability for succeeding months or quarter, as the case may be. The substitution of the rule by Notification No. 1/2007-ST dated 01.03.2007 was relied upon to hold that the rule does not impose a restriction limiting adjustment only to the immediately subsequent month. The earlier objection based on a narrow reading of the rule was found inconsistent with the statutory scheme, and the adjustment already made by the assessee was held to be permissible.

Conclusion: The assessee was entitled to adjust excess service tax paid in a subsequent month or quarter, and the departmental objection to such adjustment was unsustainable.

---